H-1B visa curbs to hit margins of Indian IT firms: ICRA

H-1B visa curbs will affect margins of India IT firms as per the latest report by ICRA. This will be due to enhanced compliances and increase in onsite recruitment, it adds. Meanwhile, the impact will be specific to firm and based on dependence on the H-1B visas, explained the rating agency ICRA.

Summary

Specific job roles eligible for the visa as of now will get disqualified

Onsite recruitment by IT firms will also go up

Margins of Indian IT firms to be hit making them credit negative

ICRA report further elaborates that H-1B visa curbs will also disqualify specific job roles that are eligible for the visa as of now. It will thus impede the flow of cost-effective workers from India. This will have a direct impact on the margins if the Indian IT firms, adds the agency, as quoted by the Economic Times.

ICRA Corporate Sector Ratings Vice-President Gaurav Jain said that the US is also considering awarding the visas to highest paid or most skilled beneficiaries. This will negatively impact the Indian IT services sector firms dependent on H-1B. It is because the average wage is roughly 25% lower than compared with firms that are not dependent on H-1B visas, added Jain.

H-1B dependent firm is defined as the one if 15% plus of its full-time workers are on H-1B Visa, said Jain. H-1B Visa curbs awarding these visas to those with the highest compensation of skill will leave less space for Indian firms to obtain the visas, he added.

Enhanced onsite recruitment or increased salaries for H-1B visa applicants will affect the margins of the firms. They will be credit negative, according to ICRA. Meanwhile, it has also been reported that the US administration plans to end the Work Permits for spouses of H-1B visa holders.